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‘Fronting’ on car insurance policies deemed 'false economy'

18 September 2007 / by None

Two-thirds (66%) of parents would consider breaking the law to save money by insuring their child’s car in their name, according to new research from insurance price comparison website Gocompare.com.

Managing Director, Hayley Parsons, said: “With car insurance premiums reaching their highest ever levels, it’s only natural that parents would want to help their children get on the road. But I was surprised that so many were prepared to lie to their insurance company to do so.”

Insurers are no longer turning a blind eye when parents take out a car insurance policy and add their child – who is actually the main driver – to the policy as a way of lowering costs; a practice known as ‘fronting’. Some insurers have even changed their underwriting criteria in response to this by charging for the highest risk driver on the policy, even when this is not the stated main driver.

“Not telling the truth about who is the principal driver is a fundamental breach of trust and is technically fraud, which may result in a policy being cancelled and any claim refused,” said Ms Parsons.

Those caught ‘fronting’, can be charged the correct premium as a lump sum, or could have their policy cancelled altogether. Cancellation, which has to be declared on future policies, also raises the price of future car insurance as many prospective insurers will refuse cover.

Insurers can refuse to pay-out for any claims or can settle a third-party claim and recover the cost from the parent if caught out. Furthermore, if the insurer declines a claim, the young driver could be seen to be driving without insurance. This could lead to high fines and six penalty points (an automatic ban for new drivers).

“As well as being illegal, ‘fronting’ is a false economy. Insurers are wise to the practice and many now set the price according to the age of the youngest driver on the policy. In the long run it is better for young drivers to hold insurance in their own name to build-up a valuable no claims discount,” Ms Parson added.

Gocompare offers tips for keeping car insurance premiums at a minimum that do not include breaking the law, such as using a car with a low the engine capacity, ideally an engine size of less than 1200cc, avoiding models with letters after it, such as ‘i’, and ‘gti’, as well as avoiding vehicles with any modifications from the standard manufacture. The company also encourages young drivers to take the Pass Plus course, which can help to reduce car insurance prices.

Find out more about comparing car insurance deals and use the Gocompare Car Insurance site to look at a range of car insurance policies.